Today, the U.S. Congress Joint Economic Committee (JEC)—led by Chairman Don Beyer (D-VA)—will hold a remote hearing titled “A Second Gilded Age: How Concentrated Corporate Power Undermines Shared Prosperity.” This hearing will examine the rise and concentration of corporate market power in the United States and how it harms consumers, workers and small businesses.
Business concentration has increased across most industries in the United States, yet instead of yielding optimal outcomes, the rise of corporate market power in the U.S. is associated with weak investment rates and low productivity growth. Firms invest less per dollar of profit today than they did 20 years ago, making labor less productive and suppressing wages.
While the Administration took aggressive action last week to address the concentration of corporate power, reversing these trends will also require raising standards for mergers and acquisitions and increasing funding for antitrust enforcement agencies to hold companies that engage in anticompetitive practices accountable.
Chairman Beyer said:
“We are here today because corporate concentration imperils shared prosperity and exacerbates economic inequality.
“Across industries—including health care, financial services, telecommunications, agriculture and more—we are seeing higher levels of concentration than there were three decades ago. Evidence shows this has led to weaker business investment, higher prices for consumers and lower wages for workers.
“This consolidation of corporate power has allowed the wealthiest at the top to capture a larger share of the gains from economic growth: Amid record-breaking profits, corporations are paying less in taxes today than they did 30 years ago while reinvesting 10 cents less per dollar of profit. All of this has led to reduced productivity gains in concentrated industries and slower growth economy-wide...
“President Biden’s Executive Order advances a whole-of-government approach to promote fair competition, and it is now our turn to act here in Congress with bold and decisive action.”
(Read Chairman Beyer’s opening statement here.)
Dr. Thomas Philippon said:
“Free markets have been a bedrock of the American economy for more than a century. Free and competitive markets have many virtues: they lead to lower prices for consumers; they encourage businesses to hire, invest and innovate; they increase the variety and quality of goods and services; and competitive labor market improve compensation and working conditions...
“Free markets, then, are a kind of public good, like clean air or clean water. We all benefit from them, but our individual incentives to protect them are rather weak. This is why we need public institutions to protect free markets, so that consumers, workers and small firms can trust the prices they see and focus on making the right decisions without excessive fear of being abused by market power.”
(Read Dr. Philippon’s written testimony here.)
Dr. Kate Bahn said:
“The United States boasts one of the wealthiest economies in the world, but decades of increasing income inequality, job polarization, and stagnant wages for most Americans has plagued our labor market and demonstrated that a rising tide does not lift all boats...
“Furthermore, economic evidence demonstrates how inequality results in an inefficient allocation of talent and resources while increasing corporate concentration that enriches the few while holding back the entire economy from its potential. Understanding the causes and consequences of the concentration of corporate power will guide policymaking in order to ensure that the economic recovery in the next phase of the pandemic will be broadly shared and ensure a more resilient economy.”
(Read Dr. Bahn’s written testimony here.)
Ms. Stacy Mitchell said:
“Independent businesses are disappearing not because they can’t compete; they are, in fact, well equipped to do so. The real issue is that we have made a series of policy choices that have doomed them. In particular, we abandoned our anti-monopoly policies. This has allowed a few corporations to amass extraordinary market power and wield it with impunity...
“Corporate concentration has exacerbated racial injustice. The ability of dominant corporations to abuse and exclude small businesses has made the already steep barriers faced by Black entrepreneurs all but insurmountable. As a consequence, there are fewer Black-owned businesses today than there were in the 1970s. At the same time, Black and brown communities have been on the losing end of worsening employment conditions, as dominant corporations … have used their market power to push down wages in warehousing, package delivery, meatpacking, and other industries that employ large numbers of people of color.”
(Read Ms. Mitchell’s written testimony here.)